The Indian stock market is now hovering at all-time highs, causing investors with a high-risk appetite or equity investors to be unsure whether to stay invested or sell. Given the current market behavior, investing solely in equities mutual funds may be perilous, as equity investors may experience a drop in their wealth if the market falls. As a recommendation, diversify your portfolio by investing in debt funds, which can provide a buffer to the gains from equity. As a result, investors can invest in aggressive hybrid funds where the total allocation funds are diversified across 75% in equity and the remaining in debt. When it comes to aggressive hybrid funds, we'll go over why you should invest in them and where you should invest.
BNP Paribas Substantial Equity Hybrid Fund Direct-Growth
BNP Paribas Substantial Equity Hybrid Fund Direct-Growth is a aggressive hybrid mutual fund scheme launched by the fund house BNP Paribas Mutual Fund in 2017. This fund has been in existence for the last 4 years and has a 77.30% allocation to equity and 12.80% to Debt. According to Value Research, BNP Paribas Substantial Equity Hybrid Fund Direct-Growth returns over the previous year have been 38.77 percent, with an average annual return of 15.87 percent since its debut. The equity component of the fund is invested in the financial, technology, construction, automobile, and fast-moving consumer goods sectors whereas the debt component of the fund is allocated across financial, sovereign, and others.
ICICI Bank Ltd., Axis Bank Ltd., HDFC Bank Ltd., Rural Electrification Corpn. Ltd., and GOI are the fund's top five holdings. The fund has Rs 625.8 crore in assets under management (AUM) and a current net asset value (NAV) of Rs 18.87 as of July 28, 2021. The fund has a low expense ratio of 0.58% and it levies a 1% exit load if units worth more than 10% of the investment are redeemed within 12 months.
Canara Robeco Equity Hybrid Fund Growth
In the year 2013, this fund was launched by the fund house Canara Robeco Mutual Fund. It is a medium-sized fund in the category, with a 73.30 percent equity allocation and a 23.00 percent debt exposure. Canara Robeco Equity Hybrid Fund Direct-Growth returns over the last year were 37.07 percent, according to Value Research data. Since its inception, it has generated an average yearly return of 15.52 percent. The financial, technology, healthcare, automobile, and construction sectors make up the majority of the fund's equity holdings. Infosys Ltd., HDFC Bank Ltd., ICICI Bank Ltd., Reliance Industries Ltd., and GOI are the fund's top five holdings.
The fund has an expense ratio of 1.95% which is much higher than other funds in the category. As of July 28, 2021, the fund has Rs 5,635.99 crore in assets under management (AUM) and a current net asset value (NAV) of Rs 229.97. If units worth more than 10% of the investment are redeemed within 12 months, the fund charges a 1% exit load.
Quant Absolute Fund Direct Growth
By the fund house Quant Mutual fund, this aggressive fund which is a small-sized fund of its category was launched in the year 2013 and has been in existence for the last 8 years. The fund has a 2.15 percent expense ratio, which is more than most other funds in the same category. The fund currently has a 77.90 percent equity allocation and a 2.10 percent debt exposure. According to Value Research, Quant Absolute Fund Direct-Growth returns over the previous year were 80.04 percent, and it has generated an average annual return of 18.38 percent since its inception.
The equity element of the fund is largely allocated to the FMCG, Financial, Metals, Construction, and Healthcare sectors. ITC Ltd., Indiabulls Real Estate Ltd., Godrej Agrovet Ltd., Tata Steel Ltd., and Fortis Healthcare (India) Ltd. are the fund's top five holdings. The fund has Rs 52.52 crore in assets under management (AUM) and a current net asset value (NAV) of Rs 269.10 as of July 28, 2021. There is no exit load on this fund, and you can start a SIP with a minimum monthly contribution of Rs 1000.
Best Aggressive Hybrid Funds In India 2021
Here are the best aggressive hybrid funds in 2021 in terms of ratings and performance.
|Funds||1-Year Returns||3-Year Returns||5-Year Returns/All||Rating by Value Research||Rating by Morningstar|
|BNP Paribas Substantial Equity Hybrid Fund Direct-Growth||38.77%||17.93%||15.87%||5 Star||5 Star|
|Canara Robeco Equity Hybrid Fund Regular Growth||35.49%||14.42%||13.78%||5 Star||5 Star|
|Quant Absolute Fund Direct Growth||80.04%||26.45%||19.22%||5 Star||5 Star|
Should you invest?
In the long-term, the above discussed aggressive hybrid fund tends to be the best as they are less risky than pure equity mutual funds and one can start SIP in these funds when the market is at a record high. Since the funds have the allocation of 75% across equity and 25% across Fixed Deposits or FD-like instruments which is nothing but the debt part of the fund, one can estimate good returns in the long run by staying invested for more than 3 years. With a diversified portfolio of both equity and debt, investors can generate regular income through the debt part and higher risk-adjusted returns through the equity part in one fund.
The debt element of the fund is the most intriguing aspect since it delivers a buffer to give consistency in returns if the market collapses and equity struggles. Such an aspect of the fund could be appealing to equity investors with a high-risk tolerance and new investors with a moderate risk profile. Due to the presence of mid-cap and small-cap stocks and low-quality debt securities, investing in aggressive hybrid funds for short term can be risky which our readers should and should keep in mind before investing in the current market scenario.
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